The Short Version
In this history of hypnotism I'm just going to give a brief overview of some of the most interesting events and characters (and there were some of those!) that influenced the way we see and practice hypnotism today.
For example, did you know that there was a man called Mesmer? We get our term "mesmerized" from one of the early practitioners. Freud also figures into the history and a few more names that you will recognize.
Our knowledge of the history of hypnotism dates back to the time of the ancient Greeks. There is historical evidence of people attending "sleep temples" (hypnosis is the Greek word for sleep) where they would often spend a week being attended by various healers. The treatment was spoken words and according the inscriptions from that time many were cured of wounds, sterility, headaches, gout, dropsy, baldness, blindness, worms, epilepsy and many other afflictions.
According to the evidence, this continued for about 1,000 years. Similar sleep temples have been discovered in Egypt dating from about the same era.
Less Distant History
What we call the scientific study of hypnotism can be traced back to 1776 when an Austrian physician, Dr. Franz Anton Mesmer, began his remarkable practice of what he called "animal magnetisism". Considered to be the initiator of hypnotism, Mesmer's methods were nothing if not unique! He was able to achieve a following and, like the Greeks, many cures were reported.
In his work he believed that the use of magnets aligned an invisible body fluid to produce the positive results.
Evolution of Hypnotism
Mesmer and most of those who followed his teachings, continued to think that they were causing an invisible body fluid to re-align with passes of magnets, or passes of a hand or sometimes a touch.
Since he was forced to move from Vienna to Paris to pursue this interest, there was an influential group of followers in France. The history of hypnotism continued as some of his students wrote books and began giving demonstrations in different parts of the world. As they traveled and as their books became known, they left an impression upon people in England (John Elliotson, James Esdaile, James Braid), North America and Germany. These encounters helped to spread the use, development and understanding of what exactly was happening.
The study is still being carried on today. Scientists are using advanced brain imaging equipment to try to understand why suggestions given under these simple and reproduce able conditions are so successful for change and healing.